Compensation conundrums

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The latest trends in compensation for the IT industry.

The IT industry is again on a roll after a long recession. It is again an employee’s market now. The professionals are in demand and are charging a premium.


Every industry tries to set some standards in compensation given to each category of employees so that they can retain the best talent. Businessgyan met with B S Murthy, CEO of the renowned top management IT executive search agency, Human Capital Consulting Private Limited, to get the latest trends in compensations for the IT industry.


“In recruitment issues, IT companies are classified into three tiers according to their size and industry segment. The Tier 1 companies are MNC product based companies like SAP, Oracle, i2, Ariba, Sun Micro, IBM, HP, Intel, Microsoft, etc., In the Tier 2 MNC Service based companies like EDS, IBM Global, PWC Accenture, igate, KPMG, etc, are taken into consideration. Indian service outfits like Cognizant, Satyam, Info, Wipro, TCS, etc., are also included in this segment, since their pay packet more or less matches the MNCs. Hardware and chip design companies are also included here.


The Tier 3 segment includes all the Indian small and medium enterprises with around 50 to 300 employee strength. This segmentation holds good for candidate selection and campus interviews too. For instance Tier 1 companies focus only on IITs and RECs for their campus interviews, while others would go for other engineering colleges. Murthy vouches for this kind of segmentation in the compensation survey which gives 90% accuracy in ascertaining salary packages.



 IT Company segment Fresher (Annual CTC) Annual CTC for every addl. year of experience 4 years experience 10 years experience
 Tier 1 (MNC product firms) Rs.5.85 - 6.0 lakh Rs.1.5 - 2.0 lakh Rs.6 - 8 lakh Rs. 15 - 20 lakh
Tier 2 (MNC services + Indian services firms) Rs.4.0 - 4.5 lakh Rs.1.3 - 1.6 lakh Rs.5.2 - 6.4 lakh Rs.13 - 16 lakh
Tier3 (Indian SMEs) Rs.2.0 - 2.5 lakh Rs.1.0 - 1.5 lakh Rs.4 - 6 lakh Rs.10 - 15 lakh

Apart from hiring freshers, companies now have a fixed compensation for every year of experience gained. As indicated in the table above, for every additional year of experience the pay package increase by a fixed amount.


Skillsets in demand


Professionals with different skillsets get paid in a varied matter depending on the company or employers.


The skillset is no more the fundamental classification for salary benchmarks. The hot jobs given a premium pay package nowadays are the same ones which have been in demand in the past few years and will remain in demand for the next 2-3 years.


1 Chip design,


2 Enterprise application,


3 SAP modules of BW & PS,


4 Network management,


5 Data storage


Functional areas


Among the functional areas apart from the IT professional, HR managers, are the most sought after people. Resourcing is a crucial segment which is in demand, with subject experts in any technical or soft skill being taken as fulltime employees. Experts in compensation benefits and training are another sector of HR. Generalists still make up for 60% of the posts in HR.


Since most of the IT companies conduct training regularly, the resource manager post is quite a crucial one with responsibilities of seeking out subject experts in various fields and managing them. HR professionals coming out of XLRI and IIMs are the most sought after by Tier 1 companies, while S P Jain and Symbiosis students are taken in by Tier 2 companies.


Facility management is now a fast growing discipline and large companies in both Tier 1 and Tier 2 segments, seek out management professionals.


Management schools  Fresh HR manager (Annual CTC) Annual CTC for every addl. year of experience
Tier 1 (IIM, XLRI, ISB, etc)  Rs.5.0 - 8.0 lakh Rs.1.0 - 1.4 lakh
Tier 2 (SP Jain, Symbiosis, etc)  Rs.3.0 - 5.5 lakh Rs.0.75 - 1.0 lakh
Tier 3 (Other MBA colleges) Rs.1.2 - 3.0 lakh Rs.0.7 - 0.4 lakh



Issue BG33-34 Jan04